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The 14 biopharmaceutical companies that have gone public so far this year in the US provided an average return of 18.6% at the end of the first quarter, dropping from an average return of 52.8% just a few weeks ago when only 10 drug developers had launched initial public offerings.

Scrip's last look at IPOs noted that returns from first-time offerings far outpaced broader stock indices as of March 9, which would explain why so many biopharma companies went public in the first quarter. If this year's pace of 14 IPOs per quarter keeps up, 2018 will beat 2017 when 42 therapeutics firms went public in the US and generated an average return of 33.2%. (Also see "IPOs In Review: Biopharma Offerings Bounced Back In 2017 As Returns Rose" - Scrip, 4 Jan, 2018.) But with returns for 2018's IPOs dropping from the 50% range into the teens, this year's trend could reverse course.

While the US market for first-time offerings remains active, drug developers also are considering ex-US IPO markets, like the Hong Kong Stock Exchange. (Also see "Asia's Nasdaq? Hong Kong‘s Quest To Be IPO Power House Has Blessings And Curses" - Scrip, 27 Mar, 2018.) However, the US remains the preferred market, attracting companies headquartered in Europe and Asia as well as home-grown biopharma firms, like the preclinical gene therapy firm Homology Medicines Inc., which priced 9m shares at $16 each on March 27 for $144m in gross proceeds.

Investors Keep Biopharma IPOs Coming

Offerings by early-stage companies like Homology are good examples of the fervor in biopharma investing. The Bedford, Mass.-based firm is a long way away from generating any revenue, yet Homology was able to take its IPO to market at the top of its proposed $14 to $16 range and sell 2.3m more shares than envisioned earlier in March.

The month's last three days of stock trading – the US market was closed March 30 for Good Friday – brought three biopharma IPOs. Following Homology, the clinical-stage immuno-oncology company UNUM Therapeutics Inc.went to market with 5.77m shares priced at $12 each on March 28 to gross $69.2m, pricing the offering at the low end of a proposed $12 to $14 range.

Then on March 29,Genprex Inc.finally launched its IPO with 1.28m shares priced at $5 each to gross $6.4m. The gene therapy developer initially floated the idea of selling 2.5m to 4.5m shares at $5 each in October, but the offering never actually went to market until now, bringing in half the cash Genprex would've raised at the low end of its earlier proposed deal size. (Also see "Finance Watch: NDA-Ready Impact Gets Commitment For Another $90m" - Scrip, 30 Oct, 2017.)

While Homology's stock closed up 16.9% versus its IPO price at $18.70 on March 29, Unum closed down 7.4% at $11.11 and Genprex dropped 6% to $4.70 (see table below).

The Genprex decline is not surprising given its apparent trouble in finding offering terms acceptable to investors, and Unum's mediocre performance isn't a shock either, since the company didn't disclose until after it filed for an IPO that there had been a clinical hold on one of its trials, although that hold was lifted in February. (Also see "Finance Watch: Biopharma IPOs Defy Broader Stock Performance Trends" - Scrip, 9 Mar, 2018.)

More Companies Enter IPO Queue

There are still plenty of IPO hopefuls, but whether the biopharma firms actually launch their offerings is yet to be seen and dependent on market conditions. Six companies that recently have added their names to the queue include:

Alzheon Inc.filed paperwork with the US Securities and Exchange Commission (SEC) on March 16 saying that it wants to raise up to $80m to fund a Phase III clinical trial for its Alzheimer's disease candidate ALZ-801, which has produced mixed results to date. The IPO-tracking firm Renaissance Capital said in a March 29 report that the Framingham, Mass.-based company may price its offering during the first week of April.

German biotech firmMorphoSys AGsaid in a March 22 filing that it plans to raise up to $150m to fund its pipeline of antibodies to treat cancer and autoimmune diseases, including development and commercialization of lead candidate MOR208 for diffuse large B cell lymphoma (DLBCL). The company toldScripthat it also wants to go public in the US to raise its profile with US investors. (Also see "Morphosys Seeks US Listing To Cement Corporate Developments" - Scrip, 23 Mar, 2018.)

UK-based Mereo BioPharma Group PLCfollowed through on plans revealed in December to list its shares in the US with a March 23 SEC filing detailing plans to raise up to $80.5m. The company said in December when it reported positive Phase II results for acumapimod in acute exacerbations of chronic obstructive pulmonary disease (COPD) that it planned to eventually pursue an IPO in the US. (Also see "Mereo On The Move With Strong COPD Data And US Listing Plan" - Scrip, 18 Dec, 2017.) The drug targets p38MAP and was acquired from Novartis AG.

Surface Oncologysaid in its S-1 statement filed with the SEC on March 23 that it will raise up to $75m in an IPO. The Cambridge, Mass.-based company's only major fundraising to date was a $35m Series A round in early 2015. (Also see "FUNDING ROUNDUP: One startup, six public companies raise cash" - Scrip, 10 Jan, 2015.) In total, Surface said in its filing that it's raised $48.6m from investors and $105m from its partner Novartis, and the company had $63.3m in cash as of the end of 2017. Surface, focused on drugs interacting with the tumor microenvironment, entered into a collaboration agreement with Novartis in January 2016. (Also see "Novartis Bolsters I-O Discovery Pipeline With Surface Oncology Deal" - Scrip, 11 Jan, 2016.) The CD47-targeting drug SRF231 is in Phase I with data expected in the first half of 2019. Novartis has an exclusive worldwide license to SRF373, which should move into the clinic in 2018.

Aslan Pharmaceuticals Pte. Ltd.went public in Taiwan last year and filed paperwork with the SEC on March 26 to raise up to $86.25m from the sale of American Depository Shares (ADSs). (Also see "ASLAN Firms Up IPO Plans As Lead Asset Progresses" - Scrip, 27 Apr, 2017.) The company's lead development program is the pan-HER inhibitor varlitinib, which is in a pivotal clinical trial for biliary tract cancer with top-line data due in 2019; top-line Phase II data from an ongoing Phase II/III trial in gastric cancer are expected in the second half of 2018.

The Canadian firmEvolve Biologics, which is the biologics division ofTherapure Biopharma Inc., said on March 28 that it confidentially submitted a draft registration statement with the SEC in support of a future IPO. Mississauga, Ontario-based Evolve did not indicate when it will price the offering or how much it will raise. Therapure was founded in 2008 as a contract development and manufacturing organization (CDMO), but it also has divisions set up to develop drugs based on proprietary protein technologies and for the development of plasma-derived therapeutics.

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